Consumer confidence is expected to spike among wealthy buyers, who would find themselves with more income thanks to extensive tax breaks

President Donald Trump’s tax proposals spell a boon for the luxury property market, as the simplified rules would create sweeping tax cuts that benefit the wealthy while also retaining incentives for high-end homeowners.

Mr. Trump, the Treasury Department and the National Economic Council unveiled a bare bones list of changes to the tax code on Wednesday that would do away with several major tax burdens, like the alternative minimum tax and the estate tax, which typically affect only the wealthiest Americans. The plan also scraps most itemized deductions except for the mortgage interest deduction, a write-off that has typically benefited high-end homeowners the greatest.

The combination of tax breaks and the retention of the home loan deduction would leave plenty of extra cash and incentive for splurging on luxury properties, industry experts said.

“From what we know, I think it’s exciting for our market,” said Eddie Shapiro, CEO of Nest Seekers International, a high-end residential brokerage. “One of the things they like to spend money on in the luxury market is real estate.”

The boost in personal income and lower corporate tax rates would foster one of the most important drivers of the luxury market: confidence.

“Wealthy people buy and sell when they feel it is a good time to do so,” Mr. Shapiro said. “Our market is very much influenced by sentiment and confidence.”

High-income earners would find themselves with more money to spend on homes thanks to Mr. Trump’s proposed tax breaks, said Nela Richardson, chief economist at Redfin, a national real estate brokerage.

The proposals do away with two programs that generally affect only the wealthy: the alternative minimum tax, a system that keeps rich taxpayers from finding loopholes, and the estate tax, levied on the estate of a dead person with a networth of $5.49 million as of 2016, according to the IRS.

The plan would also boost personal income by lowering the tax rate for the highest earners by about 5% and lowering the federal capital gains tax from 23.8% to 20%. And pass-through firms—businesses like the Trump Organization, where owners report corporate profits on their individual tax returns—would be able to claim the proposed corporate tax of 15% instead of getting hit by the individual tax rate of as much as 35%.

“The lower tax rate and the pass through of certain income at the corporate rate of 15%, that makes more money available to buy a home,” Ms. Richardson said. “So combined… this could be a really good thing for the luxury market.”

And unlike the tight inventory found in among low- and middle-income homes, the luxury segment has plenty of supply to support a boom in activity, Ms. Richardson added.

The likelihood that the president’s proposals will become law as they were presented Wednesday, however, is somewhere between “dead on arrival and significantly changed,” Ms. Richardson said. The bare bones plan left out the details, charts and comments that usually accompany such a tax overhaul, which the Senate and House will have to debate, amend and pass into law.

“There are some nuggets in here that are going to be ripped apart and the put back together,” she said.

Meanwhile, Mr. Trump’s plan to keep to the mortgage interest deduction would further fuel activity at the high end. The deduction is meant to boost homeownership, but in effect has offered limited payoff for entry-level and middle-class homeowners while providing major tax breaks to owners of multi-million-dollar properties, said Svenja Gudell, chief economist at property site Zillow.

The deduction allows homeowners to reduce their taxes by the amount of interest they paid on home loans of up to $1 million (plus a home equity line of credit up to $100,000). Taxpayers can do this for up to two non-rental homes, according the Internal Revenue Service website.

In 2012, Zillow conducted a study that found changes to the mortgage interest deduction had the greatest effect in affluent metropolitan areas, in luxury hubs like New York, Los Angeles and Miami, where home values—and therefore mortgages and interest write-offs—are steep.

In other words, the bigger the mortgage, the bigger the tax break, incentivizing people to buy bigger houses. With this tax plan, Ms. Gudell said: “The high-end earners are doing quite well.”